EXHIBIT 10.1


 


AGREEMENT


 


Agreement (“Agreement”),
dated May 14, 2008 among, Arch Capital Group Ltd., a Bermuda company (“Parent”),
Arch Insurance Group Inc., a Delaware corporation (“Arch Insurance”),
and Ralph E. Jones III (the “Executive”).


 


NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein, the
parties have agreed as follows:


 


Employment
Agreement


 


1.                  Arch Insurance and the Executive hereby
confirm the following:  (a) the employment
relationship between the Executive and Arch Insurance will terminate on July 1,
2008 (the “Termination Date”); and (b) for purposes of the
Employment Agreement, dated June 4, 2003 (the “Employment Agreement”),
between Arch Insurance and the Executive, such termination of employment shall
be deemed to be pursuant to, and in compliance with, written notice by the
Executive pursuant to Section 5.01 of the Employment Agreement of his
intention not to extend the Employment Period (as defined in the Employment
Agreement) beyond the original five-year term. 
Effective on the Termination Date, the Executive hereby resigns all director,
officer and employee positions with Parent, Arch Insurance and their respective
subsidiaries.


 


Restricted
Share Unit Agreements


 


2.                  Effective on the Termination Date, Section 2(b)(ii) of
the Restricted Share Unit Agreements, between Parent and the Executive, dated
as of February 23, 2006 and May 11, 2007 (collectively, the “Unit
Agreements”), shall each be hereby amended and restated as follows
(capitalized terms used below have the meanings set forth in the Unit
Agreements):


 


“In the event of termination of employment (other than
by the Company for Cause, as such term is defined in the Incentive Compensation
Plan) on July 1, 2008 as contemplated by the Agreement, dated May 14,
2008, among the Employee, the Company and Arch Insurance Group Inc. (such a
termination shall be deemed a termination after attaining “Retirement Age” for
purposes hereof), the Restricted Share Units shall continue to vest on the
schedule set forth in paragraph 2(a) above so long as the Employee does
not engage in any activity in competition with any activity of the Company or
any of its Subsidiaries other than serving on the board of directors (or
similar governing body) of another company or as a consultant for no more than
26 weeks per calendar year (“Competitive Activity”).  In the event the


 

















 


Employee engages in a Competitive Activity, any
unvested Restricted Share Units shall be forfeited by the Employee and become
the property of the Company.”


 


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Stock Option Agreements


 


3.                   Effective on the Termination Date, (a) the
following shall be added at the end of paragraph (j) of the Option
Agreement, dated as of July 1, 2003, between Parent and the Executive, and
(b) the second and third sentences of paragraph (j) of the Option
Agreement, dated as of September 22, 2004, between Parent and the Executive,
and paragraph (j)2 of the Option Agreement, dated as of February 23, 2006,
between Parent and the Executive (collectively, the “Option Agreements”),
shall be hereby amended and restated as follows (capitalized terms used below
have the meanings set forth in such Option Agreements):


 


 “Notwithstanding anything to the contrary herein, in the event of
termination of employment (other than by the Company for Cause, as such term is
defined in the Company’s Incentive Compensation Plan) on July 1, 2008 as contemplated by the Agreement,
dated May 14, 2008, among the Option Holder, the Company and Arch
Insurance Group Inc., the Option shall continue to become exercisable on
the schedule set forth in paragraph (f) above so long as the Option Holder
does not engage in any activity in competition with any activity of the Company
or any of its Subsidiaries other than serving on the board of directors (or
similar governing body) of another company or as a consultant for no more than
26 weeks per calendar year (“Competitive Activity”) and shall continue to be
exercisable by the Option Holder (or his Beneficiary or estate in the event of
his death) for a period ending July 1, 2011 (but not beyond the Option
Period).  In the event the Option Holder
engages in a Competitive Activity, the Option, to the extent then exercisable,
may be exercised for 30 days following the date on which the Option Holder
engages in such Competitive Activity (but not beyond the Option Period).”


 


Share
Appreciation Rights Agreement


 


4.                   Effective on the Termination Date, paragraph (j)2 of
the Share Appreciation Rights Agreement, between Parent and the Executive,
dated as of May 11, 2007 (the “SAR Agreement” and, together with
the Unit Agreements and the Option Agreements, the “Award Agreements”),
shall be hereby amended and restated as follows (capitalized terms used below
have the meanings set forth in the SAR Agreement):


 


“In the event of termination
of employment (other than by the Company for Cause, as such term is defined in
the Company’s Incentive Compensation Plan on the date hereof) on July 1, 2008 as contemplated by the Agreement,
dated May 14, 2008, among the SAR Holder, the Company and Arch Insurance
Group Inc., the SAR shall continue to become exercisable on the schedule set forth
in paragraph (f) above so long as the SAR Holder does not engage in any
activity in competition with any activity of the Company or any of its
Subsidiaries other than serving on the board of directors (or similar governing
body) of another company or as a consultant for no more than 26 weeks per
calendar year (“Competitive Activity”) and shall continue to be exercisable by
the SAR Holder (or his Beneficiary or estate in the event of his death) for a
period ending July 1, 2011 (but not beyond the SAR 


 


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Period).  In the event the SAR Holder engages in a
Competitive Activity, (A) the SAR, to the extent then exercisable, may be
exercised for 30 days following the date on which the SAR Holder engages in
such Competitive Activity (but not beyond the SAR Period) and (B) the SAR,
to the extent then not exercisable, shall be immediately forfeited.”


 


5.                   All other provisions of the Employment
Agreement and the Award Agreements shall remain in full force and effect.  This amendment shall be governed by and
construed in accordance with the laws of New York, without giving effect to principles
of conflict of laws, and may be executed in two or more counterparts, each of
which shall constitute one and the same instrument.


 


IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
and year first above written.


 


	
   

  	
  ARCH
  CAPITAL GROUP LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Constantine Iordanou

  
	
   

  	
  Printed
  Name: 

  	
  /s/
  Constantine Iordanou

  
	
   

  	
  Title:
  

  	
  President &
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARCH
  INSURANCE GROUP INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/
  Mark D. Lyons

  
	
   

  	
  Printed
  Name:

  	
  /s/
  Mark D. Lyons

  
	
   

  	
  Title:
  

  	
  President &
  COO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ Ralph E. Jones III

  
	
   

  	
  Ralph E. Jones III

  
							



 


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